The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Peter Thiel - Caricature (Photo credit: DonkeyHotey)

I'm coming to this topic late. And there have been several others who have made great points already like Jim Cramer (in an epic rant on CNBC), my Forbes blogging colleague George Anders and @The_Real_Fly on Twitter. However, I couldn't let this topic sit without weighing in.

Peter Thiel should be embarrassed. He's a director on the Facebook (FB) board. He turned a $500,000 investment in Facebook from 8 years ago into $1 billion. More power to him. God Bless America. None of that is cause for shame.

What is embarrassing is that he has just liquidated 89% of his holdings in Facebook within the last 3 months. Back in May, he owned 44 million shares in the social media company. He sold more than half of that in the initial IPO at $38. Two days after that IPO, when the stock slipped below that offering price, he put in place an automated selling plan in place that would allow him to sell a lot of his stock in the future without fear of being howled at for being an insider dumping shares. That's because he could just say he'd filed this automated plan for selling purposes.

Then, last Friday, at the first opportunity, he sold 80% of his remaining stake in the company at less than $20 bucks.

All this and he still is listed as a director on Facebook's board today.

What's the problem?, say some Silicon Valley defenders.

Someone on Twitter told me yesterday that Thiel was just meeting his fiduciary responsibility of returning capital to his own investors.

Wrong. He had none. Thiel didn't invest $500,000 from Clarium Capital which did have outside investors and was a global macro hedge fund. Thiel invested his personal money into Facebook and later parlayed that success into getting outsiders to give him money. He didn't have to sell now to give this money back to anyone.

Another commentator said, "what's the point of making an investment and then not taking a profit?" This is America. I have no problem with taking profits. After 8 years and this kind of home run return, I would want to take the profit. But I would get off the board beforehand before liquidating my stake.

Clearly, Thiel knew he was going to effectively sell all his shares pre-IPO. Why not go to Zuckerberg and ask to stand down before the IPO?